Feds offer Florida partial payment in ObamaCare spat

Feds offer Florida partial payment in ObamaCare spat

The Obama administration on Thursday agreed to give Florida some but not all of its requested federal funds for hospitals, the latest move in a fight over ObamaCare’s Medicaid expansion. 

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Florida Gov. Rick Scott (R) last month sued the Obama administration over what he called an effort to force his state to expand Medicaid under ObamaCare, by withholding funds for a separate federal program that compensates hospitals for treating uninsured people, called the Low Income Pool (LIP). 

The allegations of coercion have spilled onto Capitol Hill, where Republicans have announced a hearing on the issue this summer and have written to President Obama calling on him to stop the “overreach.” 

The Obama administration has countered that the LIP decision will be made “regardless” of Medicaid expansion but noted that LIP funds should be tailored so they do not cover costs that would otherwise be covered by Medicaid expansion.

That is, it argues it is a better system to give poor people insurance in the first place through Medicaid, rather than reimburse hospitals for treating uninsured people, as LIP does. 

The White House made its latest move on Thursday by giving Florida the “preliminary” notice that it will fund a smaller LIP program, at $1 billion, down from $2.16 billion currently. It says Florida’s request to continue the funding at about the same level does not meet the standard of being tailored to avoid overlap with potential Medicaid expansion. 

The move gives Scott some but not all of what he wanted. He had begun preparing to receive no LIP funds at all, saying the White House had effectively rejected his request by refusing to make a decision. Although the White House made a decision, it notes the formal review process is still going forward. 

Scott’s office has so far declined to comment on the Obama administration’s move.

A letter from the Centers for Medicare and Medicaid Services (CMS) to Florida on Thursday says the $1 billion for next year will help provide “stability” while the state transitions to a different system. In 2016-2017, the funding will fall again to $600 million. 

The letter suggests alternative funding sources include increasing payment rates under Medicaid, which would help make up for the lost hospital funds and taking advantage of matching federal dollars. 

The agency also points to Medicaid expansion, which Scott is opposed to. “We believe that Medicaid expansion as evidenced by experience in other states would bring significant benefits to low income Floridians and the Florida health care system,” the CMS letter states. 

The White House has used stronger words, noting that 800,000 people in Florida could gain coverage under Medicaid expansion. 

"It's difficult to explain why somebody would think that their political situation and their political interest is somehow more important than the livelihood and health of 800,000 people that they were elected to lead," White House press secretary Josh Earnest said last month when asked about Scott’s lawsuit.

The Florida situation has put other states that also rejected Medicaid expansion on edge about losing federal funds from programs similar to LIP. The Thursday move by the administration, though, indicates that, at least in Florida, it is not ending the programs completely but reducing their size to avoid overlap with potential Medicaid expansion.  

Florida’s state government is deadlocked over the question of Medicaid expansion with the Republican-controlled Senate in favor of it, while the House, also Republican-controlled, opposes it. 

Thursday’s move gives some clarity to Florida lawmakers, who had been unable to agree on a budget without knowing if they had LIP or Medicaid funds.